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May 12, 2022

Tether Was Prepared for a Bank Run

Tether CTO, Paolo Ardoino, told us last month that the cryptocurrency was ready for a bank run. Ardoino and the Tether team have done simulations of a 2008-style financial catastrophe and think that the company will be able to fulfill all redemptions even if a comparable event unfolds.

Tether’s USD peg was shaken yesterday as it plummeted to $0.95 on key exchanges such as Binance.US and Coinbase. The cryptocurrency has been trading below $0.995 for the longest period since March 2020, with many four-hour candles closing below the 0.005 mark. It has already returned to $0.993, and it appears like the peg will be restored soon. If the peg returns, USDT may have a 5% maximum pain reduction and a 48-hour recovery.

However, the possibility of this amount of volatility has already been priced into the cryptocurrency market as a whole. When stablecoins have the ability to fluctuate by 5%, they will almost certainly be struck.

In response to current market circumstances, Ardoino tweeted, “Reminder that tether is honoring USD redemptions at $1.” Ardoino stated in our conversation that Tether has never denied atonement. However, it appears that investors must have at least $100,000 Tether and be located outside of the United States unless they qualify as an Eligible Contract Participant. Tether said that they have processed over $300 million in USDT redemptions in the last 24 hours.

He goes on to say that if we have hyperinflation and a “pizza costs $1 million,” it will also be “1 million USDT.” The discussion centered on growing global inflation and the potential death of fiat money. Today, however, it is stablecoins that are in the headlines, with fears that they could be wiped out due to fluctuating market circumstances.

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Tether is glad to inform that it is operating as usual in the aftermath of this week’s market moves.

Tether continues to honor redemptions regularly, with verified consumers (in permitted areas) able to redeem USDT for USD$1 on Tether.to. Tether has honored over 300 million USDT redemptions in the last 24 hours alone and is now processing more than

USDT has remained stable despite several black swan occurrences and very unpredictable market circumstances, and even in its worst days, Tether has never failed to honor a redemption request from any of its verified consumers. USDT will continue to do so, as it has always done.